
The ruling, overturning a January decision by a lower court, comes less than a week after accused Nazi death camp guard John Demjanjuk was deemed fit to stand trial for helping to kill 29,000 Jews in World War Two.
More than 60 years after the Holocaust, the two trials are likely to be among Germany's last Nazi-era war cases.
SS soldier Heinrich Boere was captured by U.S. forces in the Netherlands after the war and confessed to killing the Dutch civilians as a member of an SS hit squad which targeted anti-Nazi resistance fighters.
He escaped and fled to Germany before being sentenced to death in absentia in the Netherlands in 1949.
After refusing a 1980 Dutch extradition request, a German court indicted him in April 2008 but in January the case collapsed when a court in Aachen, western Germany, said he was unfit for trial, due mainly to a heart condition.
"The Appeals Court did not agree with this assessment after further investigations were undertaken and carers at his old people's home were questioned," said the court in a statement.
Boere, on the Simon Wiesenthal Center's list of top ten World War Two criminals, would be entitled to breaks during the proceedings and to medical supervision, it added.
The head of the Simon Wiesenthal Center in Jerusalem, Efraim Zuroff, welcomed the decision.
"It is important that Boere's trial starts as soon as possible due to his age," said Zuroff in a statement.
A court spokesman said no starting date had been set for the trial.
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